Morning Review - 091510

8/8/2019 Morning Review - 091510

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or [email protected] Clark: 212 448 6085 or [email protected]

Beth Reed: 212 448 6096 or [email protected]

9.3%

6.1%5.7%

5.4% 5.2%4.9%

4.6%4.4% 4.3% 4.3% 4.2%

3.8% 3.6%

3.1%3.0% 3.0% 2.8% 2.6% 2.5%2.2%2.2% 2.2% 2.0%

1.8%1.5%

1.3% 1.2% 1.2%1.0% 0.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Dow Component Weightings


4/11

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25.4%23.7%

17.6%

14.2%13.0%

5.5%5.3%2.9%2.4%1.5%0.9%

-0.2%-1.0%

-1.2%

-1.4%

-1.5%-2.0%-2.5%-2.7%-3.0%

-6.7%-7.5%-7.7%-9.0%-9.2%

-11.3%-11.3%

-19.1%

-25.8%

-29.4%-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

Dow Components: Performance Since 12/31/09

23.4

19.8

16.6 16.4 16.4 16.215.7 15.4 15.2

14.6 14.614.6 14.3 14.1 13.913.1 12.9

12.4 12.2 11.911.3 11.3 10.9 10.6 10.5

9.69.1 8.7 8.4

7.7

0.0

5.0

10.0

15.0

20.0

25.0

Dow Components: 2010 Expected P/E Ratio

15.4 15.1

14.2 14.1 14.013.6 13.5 13.4 13.4 13.1 13.0 12.9

12.512.0 12.0

11.3 11.3 11.210.8

10.49.8 9.6 9.5 9.4

8.9 8.9 8.88.1

7.9 7.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Dow Components: 2011 Expected P/E Ratio128.2

98.0

81.2

68.2

30.1

14.3 14.26 .4 6 .4 5.9 5.5

-0.9 -2.9

-3.2 -4.1 -5.3 -6.0 -9.6 -9.8

-11.7-12.5-12.9-17.2-18.0

-25.5-26.2-30.1

-35.9

-51.5

-73.8-75.0

-25.0

25.0

75.0

125.0

Dow Components: Contribution to Dow's Change Since 12/31/09


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Dow on 12/31/09: 10,428.05Dow on 9/14/10: 10,526.49

Difference: 98.44

Component Weighting Perf Since 12/31/09 Contribution to Dow Price 2008A 2009A 2010E 2011E 2008A 2009A 2010E 2011EIBM 9.30% -2.7% -26.18 128.85 8.93 10.01 11.40 12.36 14.43 12.87 11.30 10.42MMM 6.09% 0.9% 5.91 84.63 5.17 4.69 5.80 6.33 16.37 18.04 14.59 13.37CVX 5.69% 2.4% 14.30 79.51 11.36 4.84 9.41 9.86 7.00 16.43 8.45 8.06MCD 5.35% 17.6% 98.02 73.94 3.67 3.98 4.52 4.89 20.15 18.58 16.36 15.12

CAT 5.18% 23.7% 128.18 71.83 5.66 2.18 3.62 5.08 12.69 32.95 19.84 14.14UTX 4.94% -2.5% -12.88 68.72 4.90 4.12 4.71 5.31 14.02 16.68 14.59 12.94BA 4.61% 14.2% 68.17 62.76 3.69 1.87 3.87 4.82 17.01 33.56 16.22 13.02XOM 4.38% -11.3% -51.48 61.01 8.47 4.01 5.80 6.48 7.20 15.21 10.52 9.42PG 4.34% -1.2% -5.34 60.64 4.26 4.11 3.95 4.33 14.23 14.75 15.35 14.00

JNJ 4.33% -6.7% -30.12 60.58 4.55 4.63 4.70 5.03 13.31 13.08 12.89 12.04Total: 188.58 Average: 19.22 14.01 12.25

KO 4.16% -0.2% -0.91 57.59 3.15 3.06 3.47 3.74 18.28 18.82 16.60 15.40WMT 3.75% -3.0% -11.73 52.66 3.42 3.66 4.01 4.40 15.40 14.39 13.13 11.97TRV 3.62% 1.5% 5.55 51.02 5.27 6.32 5.60 5.81 9.68 8.07 9.11 8.78DD 3.07% 25.4% 81.16 42.67 2.78 2.03 3.03 3.25 15.35 21.02 14.08 13.13AXP 2.96% -1.0% -3.18 40.38 2.42 1.54 3.32 3.58 16.69 26.22 12.16 11.28

JPM 2.95% -2.0% -6.00 40.72 1.37 2.24 3.61 4.59 29.72 18.18 11.28 8.87HPQ 2.75% -25.8% -73.84 39.29 3.62 3.85 4.51 4.99 10.85 10.21 8.71 7.87MRK 2.60% -1.5% -4.09 36.52 3.42 3.25 3.36 3.80 10.68 11.24 10.87 9.61DIS 2.46% 5.5% 14.21 34.05 2.27 1.82 2.08 2.39 15.00 18.71 16.37 14.25KFT 2.22% 13.0% 30.12 31.05 1.88 2.03 2.04 2.32 16.52 15.30 15.22 13.38

Total: 31.28 Average: 16.21 12 .75 11.45VZ 2.22% -7.5% -17.25 30.91 2.54 2.40 2.22 2.29 12.17 12.88 13.92 13.50

HD 2.15% 2.9% 6.43 29.97 1.78 1.66 1.91 2.21 16.84 18.05 15.69 13.56T 2.00% -1.4% -2.92 27.93 2.81 2.12 2.34 2.50 9.94 13.17 11.94 11.17MSFT 1.80% -19.1% -35.93 25.03 1.70 2.10 2.36 2.63 14.72 11.92 10.61 9.52CSCO 1.53% -11.3% -18.00 21.45 1.35 1.61 1.73 1.98 15.89 13.32 12.40 10.83INTC 1.33% -9.0% -12.45 18.74 0.92 0.77 1.95 1.92 20.37 24.34 9.61 9.76PFE 1.22% -7.7% -9.83 17.08 2.42 2.02 2.21 2.27 7.06 8.46 7.73 7.52GE 1.17% 5.3% 6.44 16.16 1.78 1.03 1.11 1.29 9.08 15.69 14.56 12.53BAC 1.00% -9.2% -9.57 13.68 0.55 -0.29 0.96 1.54 24.87 -47.17 14.25 8.88AA 0.83% -29.4% -25.48 11.49 1.19 -0.80 0.49 1.02 9.66 -14.36 23.45 11.26

Total: -118.56 Average: NA 13.42 10.85

P/E RatioEarnings

DOW COM PONENTS: CONTRIBUTION TO OVERALL DOW YTD PERFORMANCE

Component Info


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U.S. EQUITIES

Shares of most retailers rallied Tuesday after retail sales in August gained the most in 5 months. JCP was up 7.4%, while ANF (+3.8%), KSS (+3.4%) and M(+2.9%) also showed notable strength. BBY jumped 6.0% after posting a higher-than-expected quarterly profit and raising its full-year earnings forecast.Supermarket chain KR (+1.1%) also reported an earnings beat while re-affirming its full-year outlook. Many steel stocks were affected after NU (+0.3%)said 3rd quarter profit will be lower than expected due to slowing demand and steeper inventory charges, and Goldman Sachs downgraded the industrialssector to Neutral. Meanwhile, BLK (+5.9%) CEO said he was seeing a renewed flow of investor capital so far in the 3rd quarter.

Important Conferences/Corporate Meetings Today:Bank of America Merrill Lynch Media, Comm & Entertainment Conf. Newport Beach, CABank of America Merrill Lynch Global Healthcare Conference London, GBBarclays Financial Services Conference New York, NYCredit Suisse Small and Mid Cap Conference Boston, MADeutsche Bank Global Emerging Markets One on One Conference New York, NYDeutsche Bank Technology Conference San Francisco, CAGoldman Sachs Global Retail Conference New York, NYRobert W. Baird Health Care Conference New York, NYRodman & Renshaw Global Investment Conference New York, NYStifel Nicolaus Healthcare Conference Boston, MA

Important Earnings Today (with Estimates) From

Source: Thomson ONE

Three Day (High 1127.00; Low 1112.00): Prior Day SPX (High 1127.36; Low 1115.58; Close 1121.10):

S&P Futures

One Day (High 1127.00; Low 1114.00):

CLC: $0.50 DBRN: $0.49

Source: Bloomberg


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FIXED INCOME

Source: Bloomberg

Todays Important Economic Indicators/Events (with Consensus): Empire State Manufacturing Survey (8:30am EST): 5.0 Import and Export Prices (8:30am EST) Industrial Production (9:15am EST): 0.2%

o Capacity Utilization: 74.9%

Source: Bloomberg

Treasuries advanced Tuesday on speculation the Fed will announce a new round of securities purchases this year and as the dollar plunged to a 15-yearlow against the yen. The benchmark 10-year note yield dropped 8 bps to 2.67%. In the second offering since its European Union-led bailout in May,Greece sold 6-month Treasury bills, commanding stronger demand amid higher yields. Investors bid for 4.5 times the securities offered, compared with3.6 times in Julys auction, while the bills yielded 4.82% versus 4.65% at the previous sale.


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Top Online Social Networking Stories

Latest Popular Digg.com Business Stories Gallup poll shows Americans are still not spending like its 2008 again - http://www.walletpop.com/blog/2010/09/13/gallup-poll-shows-americans-are-still-not-spending-like-its-200/

What Are People Buying Online -http://www.sitejabber.com/blog/2010/09/12/what-are-people-buying-online/

Calculated Risk

NFIB: Small Businesses slightly less pessimistic -http://www.calculatedriskblog.com/2010/09/nfib-small-businesses-slightly-less.html Retail Sales increase in August - http://www.calculatedriskblog.com/2010/09/retail-sales-increase-in-august.html Capital One CEO: Very cautious about the housing market -http://www.calculatedriskblog.com/2010/09/capital-one-ceo-very-cautious-about.html Investment Contributions to GDP: Leading and Lagging Sectors -http://www.calculatedriskblog.com/2010/09/investment-contributions-to-gdp-leading.html On Retail Seasonal Hiring -http://www.calculatedriskblog.com/2010/09/on-retail-seasonal-hiring.html

The Big Picture FINRA Censures illicit Equities Trading Strategy (HFT Trading) -http://www.ritholtz.com/blog/2010/09/finra-censures-illicit-equities-trading-strategy-hft-trading/

Battle for the Internet Economy - http://www.ritholtz.com/blog/2010/09/battle-for-the-internet-economy/

Zero Hedge John Williams Sees the Onset of Hyperinflation in as Little as 6 to 9 Months as Fed Tap Dances on a Land Mine -http://www.zerohedge.com/article/john-williams-sees-onset-hyperinflation-little-6-9-months-fed-tap-dances-land-mine

Bespoke Investment Group Emerging Markets Shine -http://www.bespokeinvest.com/thinkbig/2010/9/13/emerging-markets-shine.html

EconomistMom Those Best-for-Nothing Bush/Obama Tax Cuts -http://economistmom.com/2010/09/those-best-for-nothing-bushobama-tax-cuts/

The Washington Post John Maynard Keynes, the GOPs latest whipping boy -http://www.washingtonpost.com/wp-dyn/content/article/2010/09/10/AR2010091003754.html

The Conscience of a Liberal Ever-expanding Government -http://krugman.blogs.nytimes.com/2010/09/10/ever-expanding-government/


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Documents

Morning Review - 091510